UK Manufacturing Output , January 2024: The manufacturing output data for January 2024 published this week by the Office for National Statistics (ONS) showed no change compared to December 2023 in the seasonally adjusted figures. The level of output in January was at 95.0% of its pre-pandemic peak – for the monthly series this is taken to be February 2020.
However, we prefer to focus on the rolling 3-month trends as this smooths out some of the noise in the monthly data; on this basis, total manufacturing output in the latest period (November & December 2023 and January 2024) was +0.3% higher than in the previous 3 months (August, September and October 2023) and +2.1% up on a year earlier (November & December 2022 and January 2023).
Digging down into the first level of detail, output of the capital goods industries in the 3 months to January was 0.3% higher than in the previous period and +6.4% higher than a year earlier. The January output level was 97.4% of its pre-pandemic level.
Analysis of our 4 key industries shows that it is still the automotive industry that is leading the way in terms of growth with output +4.2% higher than in the previous period and +27.8% above the level of a year ago. Both December 2023 and January 2024 saw a strong upward trend in automotive output as measured by the seasonally adjusted ONS data, with the January figure at its highest since a spike in October 2017 and 115.3% of its pre-pandemic level (although note that this industry was already on its way down before the impact of the pandemic).
There was also some good news from the metal products industry where output was up by +1.2% compared to the previous 3-month period and by +10.7% over a year ago. However, the shorter-term comparison was largely driven by a strong increase in November which will drop out of the “latest period” next month and the January figure was still only at 88.0% of its per-pandemic level.
There is a similar picture for the aerospace industry where output in the latest 3 months was +0.4% higher than in the previous period and +4.5% higher than a year ago. Despite this growth, the January output value was only 76.1% of the pre-pandemic level which suggests that there is still some way to go in the recovery for this industry, although it may be affected by some technicalities in the data methodology.
The other industry we track is machinery (or mechanical engineering) and this is by far the weakest at the moment, although there are tentative signs of a turnaround. The basic numbers are that output in the latest 3-month period was -4.8% lower than in the previous period and down by -8.7% compared to a year earlier; output in January 2024 was 82.9% of its pre-pandemic level. The bright spot is that after 4 consecutive months (August to November 2023) each with a sharp fall in output and a flat trend for December, January saw output increase.
You can download the ONS Statistical Bulletin from their web-site at https://www.ons.gov.uk/releasecalendar (13 March) or request it from MTA; we also have an analysis of the key industries which is available to members – please contact Geoff Noon ([email protected]) if you would like these charts.
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UK GDP, January 2024: With the current estimates for the final two quarters of 2023 showing the UK economy in recession, albeit is a very mild one, each monthly release of data is being scanned for signs of growth. Using the output data, the ONS calculates a monthly estimate of GDP for the UK economy and the January figure of +0.2% growth compared to the previous month suggests that the economy is on track be out of the recession at the start of 2024.
We have already seen that manufacturing output grew, although the wider grouping of industrial production was negative thanks to a very sharp drop in mining & quarrying (including oil & gas extraction) which was spread across the key elements of this group. The growth was generated by month-on-month increases in output for both the services and construction sectors.
For the latter, the monthly growth came from an increase in both new work and repair & maintenance activity with the most significant improvements in private new housing and non-housing R&M. This growth follows three consecutive falls in construction output which means that the sector contracted by -0.9% in the 3-month period up to January 2024.
In the service sector, despite growth of +0.2% in January, output has been flat in the latest 3-month period. In January 2024, 9 of the 14 sub-sectors saw an increase in output with the most significant contribution to growth coming from “wholesale and retail trade; repair of motor vehicles and motorcycles” which was boosted mainly by retail sales (excluding motor vehicles) , with wholesale trade also up significantly (wholesale and retail trade for motor vehicles fell sharply). Human health activities also grew, despite the strikes by Junior Doctors in January.
In the opposite direction, the most significant reductions in output within the services sector came from professional, scientific & technical activities; within this group there was a fall in output of “legal activities”, “architectural & engineering activities; technical testing & analysis” and “accounting, bookkeeping & auditing activities; tax consultancy”. Information and communication also fell in January 2024, mainly attributed to a sharp reduction in “motion picture, video & TV programme production, sound recording and music publishing”.
There are more details in the range of ONS Statistical Bulletins which can be downloaded from their website at https://www.ons.gov.uk/releasecalendar (13 March) or on request from MTA.